Project documents                                     Ministry of Commerce                                    Science & Te...
This document has been prepared by the United Nation’s Economic Commission forLatin America and the Caribbean (ECLAC) as p...
ECLAC – Project documents                                                                                    Renewable ene...
ECLAC – Project documents                                                                         Renewable energies poten...
ECLAC – Project documents                                              Renewable energies potential in JamaicaSSC         ...
ECLAC – Project documents                                                Renewable energies potential in Jamaica          ...
ECLAC – Project documents                                                Renewable energies potential in Jamaica          ...
ECLAC – Project documents                                                  Renewable energies potential in JamaicaJamaica ...
ECLAC – Project documents                                               Renewable energies potential in Jamaica           ...
ECLAC – Project documents                                                Renewable energies potential in JamaicaGWh and hy...
ECLAC – Project documents                                                Renewable energies potential in Jamaica        Re...
ECLAC – Project documents                                               Renewable energies potential in Jamaicasector as w...
ECLAC – Project documents                                                       Renewable energies potential in Jamaica   ...
ECLAC – Project documents                                                   Renewable energies potential in Jamaicaper bar...
ECLAC – Project documents                                                        Renewable energies potential in Jamaica  ...
ECLAC – Project documents                                                             Renewable energies potential in Jama...
ECLAC – Project documents                                                                    Renewable energies potential ...
ECLAC – Project documents                                                     Renewable energies potential in Jamaica     ...
ECLAC – Project documents                                                         Renewable energies potential in Jamaica ...
ECLAC – Project documents                                                 Renewable energies potential in Jamaica         ...
ECLAC – Project documents                                                       Renewable energies potential in Jamaicaof ...
ECLAC – Project documents                                                         Renewable energies potential in Jamaica ...
ECLAC – Project documents                                                  Renewable energies potential in Jamaica        ...
ECLAC – Project documents                                                 Renewable energies potential in Jamaicatargets a...
ECLAC – Project documents                                                    Renewable energies potential in Jamaica      ...
ECLAC – Project documents                                                       Renewable energies potential in Jamaica   ...
ECLAC – Project documents                                                 Renewable energies potential in Jamaicaand those...
ECLAC – Project documents                                                         Renewable energies potential in Jamaica ...
ECLAC – Project documents                                                               Renewable energies potential in Ja...
ECLAC – Project documents                                                Renewable energies potential in Jamaica        Re...
ECLAC – Project documents                                                            Renewable energies potential in Jamai...
ECLAC – Project documents                                                         Renewable energies potential in Jamaica ...
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
Renewable Energies Potential in Jamaica
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  1. 1. Project documents Ministry of Commerce Science & Technology Government of JamaicaRenewable energiespotential in Jamaica Detlef Loy Manlio F. CovielloPrepared in collaboration with the Ministry ofCommerce, Science and Technology of JamaicaJune 2005
  2. 2. This document has been prepared by the United Nation’s Economic Commission forLatin America and the Caribbean (ECLAC) as part of a joint project with the GermanAgency for Technical Cooperation (GTZ) entitled: “Promotion of EconomicDevelopment by the Integration of Environmental and Social Policy Approaches inLatin America and the Caribbean”, (GER/02/070).The report has been prepared by the international energy specialist and UNconsultant, Mr. Detlef Loy, and Mr. Manlio F. Coviello, Economic Affairs Officer,ECLAC, who also acted as activity supervisor.The entire work has been carried out in direct and strict coordination with thePermanent Secretary of the Ministry of Commerce, Science and Technology ofJamaica (MCST) –that acted as the official counterpart for ECLAC– in cooperationwith other governmental entities. In this regard, special mention has to be made to theGroup Managing Director of the Petroleum Corporation of Jamaica (PCJ), whostrongly supported the development of both field and conceptual work.The text was reviewed by the project coordinator Mr. José Javier Gómez, EconomicAffairs Officer, ECLAC, and by the entities of the government of Jamaica involved inthe study, including the Ministry of Land and Environment, the Scientific ResearchCouncil, the Planning Institute of Jamaica/Ministry of Finance and Planning, and theWater Resources Authority.The views expressed in this document, which has been reproduced without formalediting, are those of the authors and do not necessarily reflect the views of theOrganizations.United Nations PublicationLC/W.18Copyright © United Nations, May 2005. All rights reservedPrinted in United Nations, Santiago of ChileApplications for the right to reproduce this work are welcomed and should be sent tothe Secretary of the Publications Board, United Nations Headquarters, New York,N.Y. 10017, U.S.A. Member States and their governmental institutions may reproducethis work without prior authorization, but are requested to mention the source andinform the United Nations of such reproduction.
  3. 3. ECLAC – Project documents Renewable energies potential in Jamaica ContentsAbstract ........................................................................................................................................7Background ....................................................................................................................................9Introduction...................................................................................................................................11I. Current energy situation in Jamaica .....................................................................................15 1. Energy balance .............................................................................................................15 2. Public electricity sector .................................................................................................16 3. Supply of Liquefied Natural Gas (LNG) ........................................................................20 4. Rural electrification .......................................................................................................20II. Renewable energy policy .....................................................................................................21 1. Energy sector policy and strategy of 1995.....................................................................21 2. Co-generation policy 1995-1998 ....................................................................................22 3. Redesigning the jamaican energy policy .......................................................................23III. Wind energy..........................................................................................................................27IV. Hydropower ..........................................................................................................................31V. Biomass energy ....................................................................................................................34 1. Sugar industry in Jamaica..............................................................................................34 2. Cogeneration from bagasse...........................................................................................36 3. Bioethanol perspectives .................................................................................................40 4. Fuelwood........................................................................................................................45 5. Energy from organic waste ............................................................................................46VI. Solar energy and other renewable energy technologies ......................................................52 1. Solar radiation in Jamaica..............................................................................................52 2. Solar water heating ........................................................................................................53 3. Photovoltaics ..................................................................................................................55 4. Other renewable energy technologies ...........................................................................55VII. Carbon market perspectives for Jamaica.............................................................................57 1. Clean development mechanism under the Kyoto Protocol............................................57 2. Emission trading system in the European Union ...........................................................58 3. Carbon market perspectives in Jamaica........................................................................60VIII. Proposal for instruments & actions.......................................................................................63Bibliography..................................................................................................................................67Annexes ......................................................................................................................................75Box 1 Wigton wind farm ..........................................................................................................76Box 2 Frome sugar factory......................................................................................................77 3
  4. 4. ECLAC – Project documents Renewable energies potential in JamaicaBox 3 Ethanol facts and figures ..............................................................................................78Box 4 Ethanol fuel programmes in different countries ............................................................79Box 5 CDM procedures...........................................................................................................80Box 6 Small scale CDM (SSC) projects..................................................................................81Box 7 Outline of the CDM project cycle ..................................................................................82Table A-1Main stakeholders in Jamaica ......................................................................................83 AbbreviationsACP African, Caribbean, Pacific (states)BTU British Thermal UnitCAF Corporación Andina de FomentoCARICOM Caribbean Common MarketCBI Caribbean Basin InitiativeCDM Clean Development MechanismCER Certified Emission ReductionGCT General Consumption TaxCREDP Caribbean Renewable Energy Development ProgrammeDFP Demonstration Fuelwood ProjectDNA Designated National AuthorityDOE Designated Operational EntityDSM Demand Side ManagementEAU European Allowance UnitEIA Environmental Impact AssessmentETBE Ethyl-Tertiary-Butyl-EtherEU European UnionEU-ETS European Union – Emission Trading SystemFAO Food and Agriculture OrganizationGDP Gross Domestic ProductGEF Global Environment FacilityGTZ Gesellschaft für Technische ZusammenarbeitGWP Global Warming PotentialIEC International Electrotechnical CommissionIPP Independent Power ProducerJEP Jamaica Energy PartnersJPPC Jamaica Private Power CompanyJPSCo Jamaica Public Service Company LimitedLAC Latin America and CaribbeanLCEP Least Cost Expansion PlanLNG Liquid Natural GasLPG Liquefied Petroleum GasMTBE Methyl-Tertiary-Butyl-EtherNAP National Allocation PlanNEPA National Environment and Planning AgencyNSWMA National Solid Waste Management ActOTEC Ocean Thermal Energy ConversionOUR Office of Utilities RegulationPCJ Petroleum Corporation of JamaicaPDD Project Design DocumentPCF Prototype Carbon FundPV PhotovoltaicREP Rural Electrification Programme Ltd.RFS Renewable Fuels StandardSCJ Sugar Company of JamaicaSRC Scientific Research Council 4
  5. 5. ECLAC – Project documents Renewable energies potential in JamaicaSSC Small Scale CDMSWH Solar Water HeaterTCD Tonnes of Cane per DayTES Total Energy SupplyUK United KingdomUNFCCC United Nations Framework Convention on Climate ChangeUWI University of the West IndiesAverage exchange rate in 2004: 60 $J for 1 US$ 5
  6. 6. ECLAC – Project documents Renewable energies potential in Jamaica Abstract Jamaica has abundant renewable energy sources (RES), which have hardly been tappedin the past and could provide for large shares of the future energy requirements. In 2005, around5% of the expected 4,020 GWh of electricity produced will be based on RES (wind andhydropower). With the new planned target of a share of 15% RES electricity by 2012, a combinedrenewable capacity of about 175 MW would need to be installed in that year. There is further wind potential on Jamaica, even if no exact figures can be given on themagnitude of the exploitable wind potential. Nonetheless, it seems realistic that within the nextyears three more wind farms of about 20 MW each could be erected. Several hydropower sites have been examined in the past with all but one being of minorscale. New hydropower plants can be economical under current conditions if generation costs donot exceed about 6 US-cents per kWh. One of the largest renewable energy potentials for electricity generation is to be found inthe sugar processing industry. With the installation of new high-pressure boilers andimprovements in the energy efficiency of the sugar plants, more than 220 GWh/year of excesselectricity could be supplied to the public grid. Up to 10% of gasoline can be substituted by bioethanol or its derivate ETBE withoutmodifications to the vehicle engines. Most favourable for bioethanol production in the case ofJamaica is the use of sugar cane. Currently solar water heaters cover only about 1% of the domestic market (private housesAn estimated 75 to 100 GWh of electricity could be saved annually, if only the 45,000 residentialhomes with the highest electricity demand would use solar water heaters. In order to achieve the long-term RES goals, the existing potentials will need to be betteridentified and located, using on-site assessments and long-term measurements if appropriate.Such pre-feasibility studies will require the involvement of private investors at an early stage. To smooth administrative procedures and attract foreign investment, the establishment ofa one-stop agency as central contact point is proposed. Financial and fiscal incentives GCTwaiver or reduced duty taxes can lower the threshold for investments with high up-front costs. 7
  7. 7. ECLAC – Project documents Renewable energies potential in Jamaica Background In the context of the Latin America and Caribbean Initiative for SustainableDevelopment, Jamaica has made a commitment to raise the level of use of renewable energy to10% of total energy, by 2010. The Ministry of Commerce, Science and Technology of Jamaica is aware of the changinginvestment patterns that have made the pursuit of renewable energy markets a national priority,along with studying associated technologies and their economic characteristics. The decision toapproach renewable energy from a market or end-use perspective has been taken in order tocatalyze commercial dissemination. Furthermore, energy polices and planning have a major influence on market growth andsustainability, and Jamaica’s National Energy Policy (1995), which is currently under review,expresses the government’s commitment to continuing to foster, facilitate and encourage thedevelopment of all new and renewable energy sources where feasible. In Jamaica, the total cost ofimported energy has increased from US$ 316.4 million in 1998, to US$ 640.7 million by 2002, anincrease of over 100% in four years. In 2003, Jamaica spent approximately US$ 800 million onimported energy. It is the second largest user of foreign exchange after debt servicing. This placesa significant burden on the natural resource base to generate the needed foreign exchange. With petroleum hitting an all-time high in early 2005, the need to diversify Jamaica’senergy base has become even more urgent. Protection of the environment is a primary objective of Jamaica’s National EnergyPolicy, and one of the best options for reducing pressure on natural resources is to utilize theabundant indigenous renewable energy resources. In addition to reducing the demand for foreignexchange, the utilization of renewable energy resources would provide significant localemployment beyond what is currently provided by fossil-based systems. In order to improve the capacity to deal with vulnerability, the jamaican and Caribbeanregion needs to invest in renewable energy and energy-efficiency improvements as a priority.Reducing the need for importing energy resources will significantly reduce vulnerability to globalclimate change, as well as to the global economy. Already vulnerable for food security, the regioncannot continue to be also highly energy dependent, which leaves it even more vulnerable. 9
  8. 8. ECLAC – Project documents Renewable energies potential in JamaicaJamaica has recognized that development in the field of renewable energy is critical to theprogress of the country. * * * With this in mind, the United Nations Economic Commission for Latin America and theCaribbean (ECLAC) carried out a focus mission to Jamaica in July 2004, in order to identifyconcrete areas for cooperation and governmental support in the field of renewable energy sources.GTZ/CRDEP1 supported ECLAC during the mission, because of the high level of regionalsynergy that those institutions are currently pursuing. As a result of the discussion with different key-governmental stakeholders involved in thestudy (Ministry of Commerce, Science and Technology, Petroleum Corporation of Jamaica,Ministry of Land and Environment, Scientific Research Council, Planning Institute ofJamaica/Ministry of Finance and Planning, Water Resources Authority among others) –and inview of the very positive context for enhanced cooperation between ECLAC, the Government ofJamaica and GTZ– a final commitment was made by ECLAC to providing assistance to Jamaicain the development of its renewable energy sources, while promoting the integration of economic,social and environmental processes. A study of the ”Renewable Energies Potential in Jamaica” was identified by allstakeholders as a first, concrete step which could consolidate this cooperation process. Terms ofreference were then jointly prepared for the work, which would be carried out by an internationalspecialist before the end of 2004. The consultancy was then financed under the ongoingECLAC/GTZ joint project: “Promotion of Economic Development by Integration ofEnvironmental and Social Policy Approaches in Latin America and the Caribbean”. The selected consultant (Dipl. Ing. Detlef Loy) started his activities in Jamaica in October2004 maintaining close coordination with the various national stakeholders in the renewableenergies sector, in order to: i) obtain all the data needed to organize and centralize information onthe various renewable resources in the country; ii) carry out an updated analysis of the potentialof such resources; iii) identify the barriers to the full development of the related technologies; iv)identify the most promising technologies; v) propose actions and policies to promote suchtechnologies. The Government of Jamaica (mainly through the project’s local counterpart, i.e. theMinistry of Commerce, Science and Technology, solidly supported by the Petroleum Company ofJamaica) granted the consultant full assistance in gathering all available information, alsoproviding ad-hoc personnel and logistic support for field visits and official meetings. The concrete findings and result of the work are contained in the present Report.1 Caribbean Renewable Energy Development Project (CREDP) of the German Agency for Technical Cooperation (GTZ). 10
  9. 9. ECLAC – Project documents Renewable energies potential in Jamaica Introduction Jamaica has abundant renewable energy sources (mainly wind, biomass and solarenergy), which have hardly been tapped in the past and could provide for large shares of thefuture energy requirements. An estimated 8% of the total energy supply of Jamaica (2004) iscurrently based on alternative and indigenous energy sources, like wood, bagasse andhydropower. The by far most important alternative energy sources next to bagasse are fuel woodand charcoal, partially not considered to be renewable resources due to imbalanced extraction andreforestation. More than 90% of Jamaica’s energy needs are covered by imported crude oil andpetroleum products. This amounted to a spending of an estimated US$ 1.2 billion in 2004 forimportation of more than 25 million barrels of raw and refined petroleum. The value is equivalentto more than 15% of the gross domestic product. The public electricity sector is almost totallydependent on imported petroleum (with a minor contribution from hydropower and wind),resulting in fuel costs of around US$ 200 million in 2003. Those costs were expected to increaseto US$ 280 million in 2004, due to the sharp rise of world market prices for petroleum. This fuelprice hike led to a cost increase of US-cents 2.0 per generated kWh. The available capacity of the public electricity sector is reported to be around 780 MW(June 2004), including the new 20 MW wind farm commissioned in May 2004. 80% of thiscapacity is provided by the utility JPSCo, with the rest distributed among four IPPs. The actualinstalled capacity (name plate) is somewhat higher, but some plants are out of operation or cannotprovide the full output. Peak demand in the public electricity system was 614 MW in 2004. Linelosses and unaccounted electricity summed up to more than 700 GWh in 2004 (close to 19% ofnet production and well above the target level for the electricity price cap), thus exceeding theproduction of renewable energy electricity by far. The new Least Cost Expansion Plan of November 2004 (with addendum of March 2005)for the public electricity sector is based on the assumption of an average growth rate of 4.57% perannum over the next 23 years (until 2027). This would mean that electricity generation wouldreach about 5,480 GWh by 2012 (against 3,700 GWh in 2003), while the installed capacity in thisyear would be 1,170 MW. In 2005, around 5% of the expected 4,020 GWh of (public) electricityproduced will be based on renewable energy sources, with wind energy contributing about 60 11
  10. 10. ECLAC – Project documents Renewable energies potential in JamaicaGWh and hydropower about 140 GWh. Those figures do not contain the electricity produced inthe sugar industry from bagasse for self-supply. According to the draft of the new electricity policy, suppliers (currently only JPSCo) willbe mandated to provide a certain percentage of renewable energy electricity annually, eitherthrough own generation or purchase from external providers. Non-compliance is thought to befined. With the new planned target of a share of 15% renewable energy electricity with respect tothe total installed capacity by 2012, a combined renewable capacity of about 175 MW wouldneed to be installed in that year. If the achievable goal is related to electricity generation, theexpected growth rates would result in about 820 GWh coming from renewable energy in 2012,This means that at least an additional 130 MW based on renewable energy resources needs to beinstalled within the next seven years. The average generation costs of the public electricity supply are estimated to be in therange of 7 US-cents per kWh in 2005, with 3 cents originating from operation and maintenanceand 4 cents from fuel costs. The two independent power producers, JPPC and JEP, will supplyelectricity in 2005 at an expected cost of 11.5 US-cents/kWh and 11.0 US-cents/kWh. A newplant to be commissioned by JEP at the end of 2005 is expected to supply electricity under thesame unfavourable (while expensive) pricing terms.2 Even under optimistic fuel price conditions,average generation costs will not significantly decrease in the coming years, taking into accountthe installation of a new combined cycle plant based on liquefied natural gas (LNG) withpreferential energy supply prices and of further plants based on oil. The high generation costs ofthe current inefficient plant stock (which needs to stay in operation) will prevail. According to preliminary assessments there is further wind potential on Jamaica. Limitsare mainly set by the availability of land (unless off-shore sites can be accessed), the topographicconditions as well as road and grid access. Currently no exact figures can be given on themagnitude of the exploitable wind potential. But it seems realistic that within the next years threemore wind farms of about 20 MW each could be erected. Pre-selected sites with favourableframework conditions will need long-term wind measurements to secure high energy yields anddetermine the exact location of the turbines and the total wind farm size. Several hydropower sites have been examined in the past with all but one being of minorscale. New hydropower plants can be economical under current conditions if generation costs donot exceed about 6 US-cents per kWh. If firm capacity can be secured during most time of theyear, hydropower would be capable of displacing high-priced fossil electricity. All calculationsneed to take into account that generation costs for fossil plants tend to increase in the future. Amajor additional contribution from hydropower is not to be expected within the next decade dueto limited resources and competing water uses, which tend to reduce the river flows. All newhydropower investment would have to come from independent producers, since JPSCo showsnow interest in operating any small-scale plants beyond the existing facilities. One of the largest renewable energy potentials for electricity generation is to be found inthe sugar processing industry. Currently the bagasse output of approximately 600,000 tonnes perannum (2003) is burnt in inefficient boilers with cogeneration, covering only own heat andelectricity needs of the sugar factories. With the installation of new high-pressure boilers andimprovements in the energy efficiency of the sugar plants more than 220 GWh per annum ofexcess electricity could be supplied to the public grid, based on current cane production. At least300 GWh would be available, if the cane plantation is extended to former volumes for the(additional) production of bioethanol from sugar.2 At least until cheaper LNG is made available. 12
  11. 11. ECLAC – Project documents Renewable energies potential in Jamaica Recent field tests have demonstrated that dedicated fuelwood plantations could providemore than 90 tonnes of wood per hectare and year, based on a five year crop cycle. Suchfuelwood could be used to operate the sugar plant boilers during off-harvest periods, in order tosecure firm capacity throughout the year (with subsequent higher sales prices for electricitysupply). Other options could be to use pelleted and stored bagasse or fossil fuels assupplementary feedstock. The required modernisation of the sugar plants and operation of the cogeneration systemsas well as the capital input needed should preferably be managed by external service companieson the basis of contracting agreements with the private or state-owned mills. The specificinvestment requirements for boilers and cogeneration facility are highly dependent on technicalparameters, such as steam pressure and temperature. Up to 10% of gasoline can be substituted by bioethanol or its derivate ETBE withoutmodifications to the vehicle engines. Most favourable for bioethanol production in the case ofJamaica is the use of sugar cane. Gasoline consumption in the jamaican transport sector amountedto an estimated 4.5 million barrels in 2004. With growth rates of 4% per year, the annual demandfor ethanol could reach 0.57 million barrels in 2010. With fermentation of the whole sugar caneplant the farming of an additional 19,000 hectare would be required to cover this demand. Theblending of gasoline with bioethanol would have the additional advantage that the octaneenhancer MTBE for unleaded fuel, which is currently imported, could be gradually displaced.Mandatory goals for the introduction of bioethanol would ease the transient increase of blendedgasoline in the market. Reference sources show costs for ethanol plants with output of 76 million litres per yearto be in the range of US$ 32 million, for 38 million litres of about US$ 19 million. Off-factoryprices are then in the range of 41 to 44 US-cents per litre. Any bioethanol production would haveto be competitive with current gasoline prices (sold at about 70 US-cents/litre at the petrolstation). In addition to setting up an own bioethanol production, thoughts could be given toimport ethanol from Brazil on preferential bilateral price conditions. First cars using so-called“flexible fuel” technology are now on the market in Brazil. Those cars can either run on alcoholalone or use any mixture with blended gasoline. The 680,000 tonnes of waste collected by the regional waste managements in Jamaicacontain a large proportion of organic matter (65%). Under anaerobic conditions as on landfillsites, this biodegradable material will produce more than 180 m³ methane per tonne of waste overa time span of 50 to 100 years. About 50 to 80% of this gas can be captured by wells and drainsand used in cogeneration facilities for heat and electricity production. Landfill gas extraction anduse is one of the cheapest measures to tap renewable energy sources and offers goodopportunities for additional financing within the flexible mechanisms of the Kyoto protocol(Clean Development Mechanism). Further investigation will be needed to analyse the current andfuture landfill gas potential and to assess viable and profitable solutions for the capturing of themethane. Biogas from animal manure and sewage sludge will only provide limited contributions tothe overall energy consumption, but can have a significant impact in individual cases, like in thefood processing industry in connection with organic waste treatment. Sewage treatment plantscan be operated on a stand-alone basis if biogas is used for oxygen supply and electricity needs. Jamaica has a high medium solar radiation of about 4.8 kWh/m² per day. Currently solarwater heaters cover only about 1% of the domestic market (private houses). The total number ofsolar water heaters is estimated to be in the range of 7,000, mainly in the form of small-scalepassive thermosyphon systems with integrated water tanks. Higher oil prices and subsequentelectricity price increases offer new opportunities for solar water heaters mainly in the domestic 13
  12. 12. ECLAC – Project documents Renewable energies potential in Jamaicasector as well as for hotels, restaurants and hospitals. Primarily new housing schemes could cost-efficiently be equipped with solar heaters. In order to stimulate the market, mandatoryrequirements as well as tax incentives should be taken into consideration. The wide-spread application of solar water heaters could certainly contribute to loweringsignificantly the current peak demand of electricity at evening hours and levelling out the loadcurve, thus avoiding high-cost electricity generation. An estimated 75 to 100 GWh of electricitycould be saved annually, if only the 45,000 residential homes with the highest electricity demandwould replace their electrical systems by solar water heaters. Existing photovoltaic applications for rural electrification show rather negative resultsdue to a lack of continued monitoring and maintenance as well as the absence of funding forspare parts and rehabilitation. New solar electric installations for remote houses will need to beestablished within an improved long-term financing and operation scheme. It is estimated thatabout 6,000 houses will not fulfil the minimum conditions for grid extension by JPSCo andwould therefore be targets for stand-alone generation systems. Financing through the sale of emission certificates within the Clean DevelopmentMechanism can facilitate the implementation of renewable energy projects. Such sale will undercurrent pricing conditions “earn” 0.4 US-cents/kWh and more. Of particular interest for Jamaicacould be small-scale projects of up to 15 MW capacity, which are subject to a fast-trackprocedure with reduced application requirements and lower transaction costs. As to avoid anumber of unsolicited proposals, the Government should set priority development goals and drawthe attention of potential investors to respective opportunities. In order to achieve the long-term renewable energy goals, the existing potentials willneed to be better identified and located, using on-site assessments and long-term measurements ifappropriate. Such pre-feasibility studies will require the involvement of private investors at anearly stage. To smooth administrative procedures and attract foreign investment, the establishment ofa one-stop agency as central contact point is proposed, that acts as a node between the investorand the Government, coordinate actions with all public entities involved and promote theintegration of sustainable energy approaches into the main economic policies. Tendering procedures for renewable energy projects in the electricity sector make onlysense if they are related to specific sites and technologies. A competition among differenttechnologies and across various external conditions will hardly deliver the expected results andcould even be counter-productive. Financial and fiscal incentives like income tax rebates, GCT waiver or reduced duty taxescan lower the threshold for investments with high up-front costs, as in the case of renewableenergy technologies. For larger projects the accessibility of low-interest long-term credits and anadequate risk management is an essential. State guarantees can support and facilitate banklending. An additional financing source could be the proposed Energy Efficiency Fund with anextension for renewable energy projects. For renewable electricity supplied to the public grid a non-discriminatory access totransmission lines as well as secure long-term rates based on prospected effectively avoided costs(including external social and environmental benefits) are pre-requisites for any investment.Small-scale power generation units should be enabled to work with uniform net-metering andinterconnection standards. The achievement of the renewable energy goals will not only depend on external factors,but also on a strong and competent administrative structure with clear responsibilities andsufficient and well informed personal capacity. 14
  13. 13. ECLAC – Project documents Renewable energies potential in Jamaica I. Current energy situation in Jamaica 1. Energy balance Jamaica’s total energy supply (TES) amounted to about 27.1 million barrels of oilequivalent in 2003 and is almost completely dependent on non-indigenous fossil fuels. More than90% of the TES consists of petroleum imports (crude oil and derivates) from Mexico andVenezuela, less than 2% is covered by imported coal. More than 7% is supplied from alternative energy, mainly on the basis of renewableresources (table 1). Part of the consumed fuelwood is considered to be non-renewable, i.e. theextraction of wood and reforestation is not balanced. The by far most important renewable energysources are bagasse (for cogeneration in the sugar industry) and wood (for domestic cooking andfrying), while hydropower and wind energy (not yet included in the 2003 statistics) play only aminor role. TABLE 1 TOTAL ENERGY SUPPLY 2003 Jamaica 2003 – Total energy supply Oil 91.10% Coal 1.70% Renewable/Alternative 7.14% Hydro 0.7% Charcoal 0.8% Fuelwood 2.4% Bagasse 3.3% 100.00% Source: MCST, Feb. 2004. Growth rates for the TES varied in recent years between -0.1% (2000/2001) and 3.8%(2001/2002). Total spending for the import of petroleum products and crude oil was close to US$ 800million in 2003, with average prices for raw oil of US$ 28.4 and for refined products of US$ 30.0 15
  14. 14. ECLAC – Project documents Renewable energies potential in Jamaicaper barrel. With world oil market prices skyrocketing in the course of 2004, import spending forpetroleum was above US$ 1.2 billion for this year.3 Most of the petroleum is consumed in the bauxite/alumina industry (for the self-supply ofelectricity, table 2). Second major consumer is the public electricity sector (with close to 6.5million barrels in 2003), followed by road transport (almost 5.9 million barrels). TABLE 2 PETROLEUM CONSUMPTION BY ACTIVITY 1999-2003 (in barrels) (p) Activity 1999 2000 2001 2002 2003 Road & rail transportation 5 950 265 5 691 514 5 714 767 5 883 380 5 866 667 Shipping 204 441 156 024 356 187 360 968 391 008 Aviation 1 519 714 1 640 492 1 452 198 1 616 873 1 589 139 Cement manufacture 400 768 183 190 132 759 84 941 51 124 Electricity generation 5 267 036 5 889 825 6 031 323 6 136 061 6 471 480 Bauxite/alumina processing 8 739 108 8 763 373 8 595 428 9 167 593 9 548 474 Sugar manufacturing 151 091 186 159 144 500 152 178 114 086 Cooking & lighting 893 559 889 818 873 776 906 919 905 551 Petroleum refinery 288 555 285 787 296 526 259 405 Other manufacturing 81 795 81 450 55 516 73 066 142 276 Other 215 188 112 141 364 349 375 499 252 743 Total 23 422 965 23 882 541 24 006 590 25 054 004 25 591 953 Source: PCJ 2004. (p) preliminary. 2. Public electricity sector The electricity market continues to be dominated by the utility JPSCo despite an openingof the generation sector for independent power producers (IPPs) in the 1990s.4 The formerlystate-owned JPSCo was privatized and sold in 2001 and operates now under a 20 year-licence,granting it the right to act as single buyer for electricity delivered by external producers andmaintaining the sole ownership on transmission and distribution lines. Since 1 April 2004competition has formally started in the generation sector, requiring public tenders for most of thefuture capacity additions. Regulation of the electricity sector is exercised by the Office of Utilities Regulation(OUR), which was established in 1995. 2.1 Capacity, production and costs As of June 1, 2004 the total installed capacity for public electricity generation was 821MW, but a number of facilities were out of operation. The available capacity accounted for about780 MW, including the 20 MW from the Wigton wind farm. Of this 621 MW was provided byJPSCo, the rest by four independent power producers under long-term (20 years) contractualagreements.3 Oil prices averaged about US$ 48 per barrel in 2004.4 The first IPP contracts were signed in 1994. 16
  15. 15. ECLAC – Project documents Renewable energies potential in Jamaica JPSCo’s steam plants were commissioned between 1968 and 1976 and need to be graduallyreplaced by modern facilities. In 2002 and 2003 a total of 120 MW combined cycle capacity wasput into operation. In 2003 JPSCo’s power plants contributed with 72.3% to the total electricity output, withthe remaining delivered by IPPs (see table 3). More than 45% of the electricity was generated inthe relatively old and inefficient thermal (steam) plants. TABLE 3 CAPACITY AND GENERATED ELECTRICITY IN 2003 Generating Electricity generated capacity MW GWh Percentage Total (JPSCo + IPP) 785.6 3 696.0 100.0 JPSCo: Steam 332.0 1 685.0 45.6 Hydro 21.5 146.3 4.0 Slow speed diesel 36.0 200.3 5.4 Gas turbine 237.5 641.9 17.4 JPSCo. total 627.0 2 673.6 72.3 Independent producers: 1 022.4 27.7 Jamaica energy partners (JEP) 74.2 5 Jamalco 11.0 Jamaica private power company 61.3 (JPPC) 6 Jamaica broilers 12.1 IPP total 158.6 Source: JPSCo. Growth rates in the electricity sector have been varying significantly in recent years,between 1.7% in 2002 and 11.8% in 2000 (against previous years). The public electricity system has produced about 3,700 GWh in 2003 and sold close to3,000 GWh with the difference accounting mainly for line losses, unmetered consumption andtheft.7 All losses combined amounted to 18.6% of net generation. With full operation of theWigton wind farm in 2005, renewable electricity (hydro and wind) will account for about 5% ofthe expected total output of 4,020 GWh. In 2003, about 37% of the sold electricity was consumed by residential and small-scalecustomers, with the remaining delivered to the commercial and service sector, industry andagricultural facilities (table 4). The average price per kilowatt-hour was approaching 19 US-centsfor households, including taxes and fuel costs.5 It is expected that not more than 5 MW of the contracted capacity will be available in 2005.6 Contract was cancelled at the end of 2003.7 Sales demand for 2004 was estimated to be 3,075 GWh. 17
  16. 16. ECLAC – Project documents Renewable energies potential in Jamaica TABLE 4 JPSCO ELECTRICITY SALES AND REVENUES IN 2003 (PRELIMINARY) Sold Revenue Average revenue per unit GWh Percentage $J US$/kWh8 Residential rate 1 106.7 36.9 11 748 604 19.3 General service rate 20 652.4 21.8 5 974 248 16.6 Power service rate 40 625.7 20.9 4 495 123 13.0 Large power rate 50 540.6 18.0 3 534 253 11.9 Street lighting rate 60 59.9 2.0 638 414 19.4 (a) Other 13.1 0.4 157 512 21.8 Total 2 998.3 100.0 26 548 153 16.1 Company use 12.4 Line losses & other unaccounted for net 685.3 generation Total electricity produced 3 696.0 Source: JPSCo. (a) Includes other generating and other operating revenues. With the exception of some hydropower contribution (and more recently wind energy) theelectricity system is completely reliant on imported oil. JPSCo consumed within its plants a totalof 5.2 million barrels in 2003 of fuel oil and diesel, the (then four) IPPs another 1.3 millionbarrels. Generation costs for 2005 are estimated to be between 6 and 7 US-cents/kWh for JPSCo’ssteam plants, 5 US-cents/kWh for diesel generation and 6 US-cents/kWh for combined cyclegeneration. For purchased electricity from JPPC and JEP a high 11.5 respectively 11.0 US-cents/kWh have to be paid.9 2.2 Tariff system Electricity tariffs are regulated for all customer groups by OUR after proposals fromJPSCo, based on expected expenses and a requested return of investment. The different factorswhich determine the end-user tariffs represent a price-cap-scheme, allowing JPSCo to benefitfrom improvements (e.g. by reducing the heat-rate below the target levels) and accept financialdisadvantages if the performance objectives and standards are not met. Tariffs contain a basic connection and electricity charge (non-fuel base rate), and a variablefuel and IPP charge. The fuel charge is adjusted monthly according to international fuel pricechanges, inflation and exchange rate of the jamaican Dollar. Fuel price variations are thereforedirectly transferred on to the consumers. The IPP charge is also monthly adjusted and reflectsvariations of the non-fuel costs of IPPs.8 Based on an exchange rate of 50 $J for one US$ (reference value).9 In June 2004 the monthly capacity payment for JPPC was 41.7, for JEP 23.0 US$/kW. The energy payment was 51.6 resp. 60.1 US$/MWh. 18
  17. 17. ECLAC – Project documents Renewable energies potential in Jamaica Due to fuel price increases and the devaluation of the jamaican dollar, generation costs andtariffs have moved upward considerably in recent years. A new 5-year tariff scheme came intoeffect in June 2004 with the average non-fuel revenue to be recovered from customers by JPSCoset at $J 5.627 per kWh. System losses are capped at 15.8%, heat rates at 11,200 kJ/kWh for thewhole five year period.10 The tariff scheme now provides for five main rate schedules and special rates for stand-bypower. The last applies for customers with a minimum demand of 25 kVA, who own and operatepower production equipment or other source of power to meet their own electricity requirementand in addition contract to take supply from JPSCo on a firm or non-firm basis. 2.3 Least cost expansion plan In November 2004 the new Least Cost Expansion Plan (LCEP) submitted by JPSCo wasapproved by the Regulator OUR. The LCEP sets a timeline until 2017 for the addition andretirement of generation capacity in the public electricity grid. It is based on the assumption thatthe prospective growth rate of electricity generation and peak load will be on average 4.57%/yearin this period and that a reserve margin of at least 25% is required (table 5). In March 2005, the OUR approved an addendum to the LCEP extending the forecast perioduntil 2027, thus covering the whole time-span of the envisaged LNG import from Trinidad andTobago (see next chapter). TABLE 5 FORECAST FOR ELECTRICITY DEMAND Year Peak Growth rate Electricity Growth rate generated (percentage) (gwh) (percentage) (e) 2004 614.0 4.1 3 848.3 4.1 2005 641.9 4.5 4 023.1 4.5 2006 670.8 4.5 4 205.0 4.5 2007 700.8 4.5 4 393.9 4.5 2008 732.1 4.5 4 591.6 4.5 2009 764.8 4.5 4 798.6 4.5 2010 798.9 4.5 5 014.5 4.5 2011 834.6 4.5 5 241.3 4.5 2012 871.9 4.5 5 478.6 4.5 2013 911.1 4.5 5 728.1 4.6 2014 952.1 4.5 5 989.9 4.6 2015 995.3 4.5 6 265.6 4.6 2016 1 040.5 4.5 6 555.0 4.6 2017 1 088.1 4.6 6 860.3 4.7 Source: LCEP, Nov. 2004. (e) Estimated.10 The heat rate in 2003 was 11,554 kJ/kWh. 19
  18. 18. ECLAC – Project documents Renewable energies potential in Jamaica 3. Supply of liquefied natural gas (LNG) In November 2004 the Governments of Jamaica and Trinidad and Tobago signed aMemorandum of Understanding on the annual supply of 1.15 million tonnes of LNG underpreferential pricing terms over a 20-year period. The delivery is envisaged to start in 2008 and would mainly contribute to the supply oftwo new combined cycle power plants, the growing energy demand of the bauxite and aluminaindustry, the subsequent replacement of oil in other power plants (in first place those unitsoperated by JEP and Jamalco) and the requirements of other industrial, commercial andresidential final consumers. Now private investors are sought to participate in the setting up of the infrastructureneeded to unload, store, regasify and distribute LNG. The purchase price is expected to be below3.90 US$/million BTU (2004)11 and will equal prices paid by large-scale customers in Trinidadand Tobago, when the world market price was in the range of 4.30 US$/million BTU. 4. Rural electrification Jamaica has a high grid-connection rate of about 95%, based on the basic requirementthat at least 20 houses need to be located within one mile of a distribution line. In 2002 a 100%electrification target was set to be achieved within a 5-year-period. In 1995 the state-owned company Rural Electrification Programme Ltd. was establishedas a non-profit company to carry out grid-extensions and connection of rural households. Sincebeginning, about 68.000 households were electrified with an estimated 350.000 people beingaffected. More than 3.000 miles of a single-phase line were constructed at state costs (withsupport of international donors like the Caribbean Development Fund and KfW) and later handedover to JPSCo. Connection to the grid and in-house wiring (two plugs and lighting) has to be done at fullcosts of about $J15,000 to be charged from the customer. $J1,500 have to be paid up-front; therest is repaid on a loan-basis with zero interest over a 4 years period ($J280 /month). Thisrepayment is going into a revolving fund. Since privatisation of JPSCo in 2001 the transfer of theassets and its value is in discussion. It is estimated that about 20,000 houses remain for electrification, of which roughly 6,000do not meet the required density standards for grid extension. The later ones are therefore primetargets for individual solutions based on solar electricity, small windpower systems or otheroptions, which could include the use of renewable energy sources. Surveys deem necessary to geta more precise picture of the current energy use in rural areas and the expectations and financialcapabilities of rural households.11 The Least Cost Expansion Plan (October 2004) refers to a price of 3.50 US$/million BTU. 20
  19. 19. ECLAC – Project documents Renewable energies potential in Jamaica II. Renewable energy policy 1. Energy sector policy and strategy of 1995 In 1995, the Government of Jamaica approved and published an Energy Sector Policyand Strategy paper, which will be revised in the course of 2005.12 This paper was essentially adescription of the status-quo-situation and focussed as well on the potentials from indigenousenergy supplies and energy efficiency measures. The paper defined as main objectives of theEnergy Sector Policy to: • Diversify the energy base; • Encourage the development of indigenous energy resources (where economically viable and technically feasible); • Ensure the security of energy supplies; • Minimize the adverse effects of pollution caused by the production, storage, transport and use of energy, and minimize environmental degradation as a result of the use of fossil fuel. In order to achieve this objective the principle aim was to establish an appropriateregulatory framework to protect consumers, investors and the environment. As one of the central pillars of the energy policy it was stated, that the use ofcogeneration would continue to be pursued and principles under which the electricity company(JPSCo) purchases electricity from co-generators would be clearly established (see below). Institutional and political support was thought to come from a central “EnergyConservation and Renewable Energy Unit” within the Ministry responsible for energy whichwould act as a facilitator for all new and renewable energy projects. In 2000 the Government of Jamaica considered to produce 12% of all its electricityrequirements from renewable energy sources by 2020 and established the following interimtargets:12 A draft for the new policy of the Electricity Sector has already been released in June 2004. 21
  20. 20. ECLAC – Project documents Renewable energies potential in Jamaica 6% by 2006 8% by 2010 12% by 2020 2. Co-generation policy 1995 - 1998 As part of the official jamaican Energy Policy, the then fully state-owned utility JPSCoestablished its co-generation policy in 1995. The company expressed its willingness to enter intomulti-year contracts for the purchase of electricity from small-scale independent power producersoperating plants of 2 MW or less electrical capacity (so-called “qualifying facilities”). Standardconditions for such facilities were designed to allow for fast-track agreement procedures, withoutthe need of individual contractual arrangements. JPSCo agreed to take over the producedelectricity into its grid up to a combined total of 20 MW and for contracts signed before the endof 1998. At that time, JPSCo also expressed its interest in purchasing power from plants exceedingthe size of 2 MW; but in such cases an individual contract was to be negotiated with JPSCo; andsuch plants would only be accepted if they were consistent with the current Least Cost ExpansionPlan. Such plants were to be selected by a system of competitive procurement, as well asexamination of the suppliers ability to integrate the operation of his system with the utility. As pre-conditions for the purchase of any power from third-party operated co-generationplants, JPSCo defined that: a. The aggregate power available from these sources serves to postpone or avoid the need for new generating plant, or to improve the reliability of the system; b. The cost of the purchase of electric power through a long-term contract is no greater than the cost the utility would otherwise incur, except for a premium paid to users of renewable energy sources (see below); c. The combined efficiency (electrical and thermal) would be greater than that of the most efficient plant operated by JPSCo. d. The facility demonstrates that a minimum of 20% of the heat is used in some external application; e. That the operation of the project, as designed, produces a net foreign exchange benefit for the country; and f. The small producers comply with all applicable environmental regulations. Standard purchase rates for a period of 5-10 years were established for qualifyingfacilities, incorporating both capacity and energy components, applicable depending on theprovision of firm capacity at certain times of the day. The pricing scheme was based on JPSCosavoided cost principle (cost no greater than it would have incurred in providing a similar amount 22
  21. 21. ECLAC – Project documents Renewable energies potential in Jamaicaof power itself), allowing renewable energy co-generators to benefit from an additional premiumof up to 15% above the “regular” level. JPSCo declared to make supplementary, standby and maintenance power available tosmall-scale cogeneration operators, at rates, which reflected the cost of providing these services.Those special tariffs did not apply to co-generators or renewable energy producers whose ownneeds would otherwise be provided for under Rate 10 (Residential) or Rate 20 (General Service). It was further determined that each Qualifying Facility shall be obliged to payinterconnection costs on a non-discriminatory basis with respect to other customers with similarload characteristics, including the cost of the provision of the transformer if necessary. Despite such relatively favourable conditions for small-scale co-generators, thispromotional scheme did not prove successful with only one smaller unit at a hotel beingconnected to the grid during the envisaged time period.13 Main reasons for the low grade ofacceptance were the low power purchase rates, the comparatively short contractual period, theinexperience of potential co-generators (like hotel-owners and industries), the high up-front costswithout sufficient bank crediting and the lack of technical capability to combine renewableenergy resources with co-generation facilities (as e.g. in the case of biogas co-generation fromorganic residues in the food processing industry). In contrast to this negative result for Qualifying Facilities, JPSCo contracted severalindependent large-scale producers on the basis of individual long-term purchase agreements forthe supply of electricity to the public grid, using fuel oil. 3. Redesigning the jamaican energy policy Ten years after the above-mentioned analysis, the need for the tapping of renewableenergy sources is more compelling than ever before. The demand for all types of energy hasincreased substantially within the last decade, oil prices have soared up to the highest all-timelevel, consuming an ever larger percentage of GDP and foreign exchange income, and manynatural resources still remain untapped or inefficiently used. Beyond this, national and international private investors and financial institutions aremore inclined to support renewable energy projects, while risks could be minimized and newfinancial resources were made available. A number of technical applications, which were judgedas being economically unattractive 10 years ago, are now competitive or nearing equalopportunity on a commercial scale. Taking further into account the environmental and socialbenefits connected with a number of those alternative options, the advantage of many projects,which pursue the tapping of indigenous renewable energy sources, is evident. The Government of Jamaica is therefore in the process of redesigning its energy policy.As a first step, a consultation paper on Electricity Sector Policy has been released in June 2004 bythe Minister for Commerce, Science and Technology, opening the forum for further discussion.Other energy sectors will be targeted in a separate draft, elaborated under guidance of the PrimeMinister’s office and due to be published in spring 2005.13 The 2 MW project was commissioned at Braco Resorts, a Hotel complex located in Trelawny, in 1997. Excess electricity was delivered to the public grid. The diesel generators had to be dismantled due to a number of technical problems. 23
  22. 22. ECLAC – Project documents Renewable energies potential in Jamaica 3.1 Draft for the electricity sector policy (2004) In this paper, the Government reconfirms its commitment to reduce the dependence onimported energy through continued exploration for and development of indigenous energyresources. This includes renewable energy sources as well as fossil energy (like natural gas)extracted within the national borders of Jamaica. Special emphasis is given to the involvement ofthe private sector. Of major importance is the point that all new generation capacity to come on stream inthe future shall be subject of a competitive and transparent bidding process. This has to be seen inthe light that the overall framework of the electricity sector has changed, since JPSCo has beenprivatized in 2001 and the electricity market was opened for competition in the generation sectorin April 2004.14 A separate tendering is thought to take place for renewable energy projects whose overalltarget is set for 15% of the total installed capacity of the public electricity system in 2012. Asimplified procurement process is provided for renewable and cogen capacity addition of 15 MWand less. Such facilities will qualify for a premium of 15% above the avoided costs of JPSCo’sleast cost facility. The electricity sector policy maintains the term of Qualifying Facilities, as originallyused in JPSCo’s co-generation policy of 1995 (see above), but extends the definition to all small-scale power generators below 2 MW, with cogeneration or not. Such facilities will not be part ofthe Least Cost Expansion Plan (LCEP) and operators can refer to standardized power purchaseagreements (7-10 years) without having to negotiate individual contracts or will get the option ofnet-metering, as in the case of grid-connected photovoltaic systems.15 A cogeneration plant willbe required to demonstrate that its combined efficiency is greater than that of the most efficientthermal plant operated by JPSCo. By the end of 2004 about 6% of the installed capacity of the public electricity system of737 MW was based on renewable energy sources. Based on the Least Cost Expansion Plan 2004-2017 with average annual growth rates of 4.57 %, as approved in November 2004 (and furtherrevised and extended in March 2005), in order to achieve the target of 15% renewable energycontribution of the total system capacity, more than 130 MW of additional RE capacity wouldneed to be installed between 2005 and 2012 (see table 6). TABLE 6 RENEWABLE ELECTRICITY EXPANSION UNTIL 2012 BASED ON THE CURRENT LCEP (MARCH 2005) Year Total system Renewable Renewable energy Renewable energy 16 capacity energy target share based on share based on (mw) (percentage) capacity (mw) generation (gwh) 2004 737 6.0 44.0 2006 861 8.0 69.0 210 2010 1 055 10.0 105.5 500 2012 1 170 15.0 175.5 820 Source: LCEP Addendum No. 1, March 2005; own calculation.14 JPSCo. will keep the monopoly for transmission and distribution and continue to act as a single buyer until the end of its licence period in 2021.15 Models for such standardized power purchase and net-metering agreements still have to be designed.16 Excluding the renewable energy capacity. 24
  23. 23. ECLAC – Project documents Renewable energies potential in Jamaica An important role for the further promotion of renewable energy projects is assigned tothe state-owned PCJ. To bring about new projects, PCJ or its subsidiaries may joint venture withthe private sector as a minority equity partner. But the main role of PCJ shall be to developrenewable power generation projects and to seek for expression of interests from private investorsto build, own and operate such facilities. An important aspect for the future development of renewable electricity could also be theprovision to enable non-discriminatory access to the transmission grid, so that self-generators ofelectricity could transport (wheel) electricity for own use from the generation to the (remote)consumption site at transparent rates, defined and approved by the regulating entity OUR.17 Nolegal barrier shall prevent an end-user to self-generate and use electricity for its own purposes. The basic terms for rural electrification have been defined in the All-Island ElectricityLicence for JPSCo in 2001. The utility and the state-owned Rural Electrification Programme Ltd.(REP) were instructed to periodically agree on the development plans proposed by REP. Thisincludes as well off-grid electrification based on renewable energies. The new energy policy provides that REP acts as a non-grid electricity supplier for ruralregions outside of JPSCo’s licensed area. REP will therefore fall under the regulatory supervisionof OUR. 3.2 Model electricity bill (draft of July 2004) Parallel to the formulation of a revised Electricity Policy, new electricity legislation hasbeen designed on the background of a liberalized power market with new players entering thescene. This new legislation will replace several out-dated laws related to electricity sectorregulation, in particular the Electricity Lighting Act of 1890 and its amendments.18 The model electricity bill, which has still not been approved by the parliament, refers torenewable energies as follows: “59. (1) The Minister may, on the recommendation of the Office19 following consultationwith the suppliers concerned, by order require each licensed supplier, before a day specified inthe order, to make (in so far as he has not already done so) and produce evidence to the Officeshowing that he has made such arrangements as will secure the result mentioned in subsection(2). (2) The result referred to in subsection (1) is that, for a period specified in the order,there will be available to the licensed supplier (a) From renewable or indigenous generating stations; or (b) If the order so provides, from generating stations of any particular description, anaggregate amount of generating capacity which is not less than that specified in relation to himin the order; and an order under subsection (1) may make different provision for differentsuppliers. (3) Prior to setting targets in terms of (2), the Minister shall consult with the Office as tothe measures to be taken or planned, at national level, and shall authorise the Office to take suchmeasures as the Office reasonably considers most likely to achieve such national indicative17 No transmission rates for electricity transport had been disclosed by OUR by the end of 2004.18 The proposed law is based on examples from the UK Electricity Act 1989, the Hong Kong Electricity Ordinance 1999 and the India Electricity Act 2003.19 This means the regulator OUR. 25
  24. 24. ECLAC – Project documents Renewable energies potential in Jamaicatargets at minimum economic cost taking into account the duties of the Minister and of the Officein 4(1). (4) The Minister may require the Office to publish, for the first time not later than thefirst anniversary of the setting of targets in terms of (1) and thereafter every two years, a reportwhich includes an analysis of success in meeting the national indicative targets taking account, inparticular, of climatic factors likely to affect the achievement of those targets and which indicatesto what extent the measures taken are consistent with the national climate change commitment.” With this paragraph, the Government would therefore be capable of setting definedtargets for renewable energy power plants with respect to the total generating capacity, which theelectricity suppliers would be obliged to accomplish. But the act further rules that in making sucha direction the effect of the additional cost of such purchases on customers’ bills must be takeninto account. Periodical reports about the achievements of the targets will prepare the basis for theGovernment to reconsider its objectives and policy instruments. For hydropower projects, the draft of the Electricity Bill stipulates, that the OUR “mayrequire through licence conditions any licensed generator who owns, operates or plans tooperate a hydro-electric generation to operate such station in such manner as will reasonablyprotect the interests of users of water downstream of the generation station in respect of suchwater.” (Paragraph 65) The draft of the Electricity Bill further contains a model Power Purchase Agreement,which is likely to form the basic principle of future tendering processes for larger generationcapacities, including those based on renewable energy resources. 26
  25. 25. ECLAC – Project documents Renewable energies potential in Jamaica III. Wind energy Jamaica, like many of the Caribbean islands, has a reasonable wind potential which hasscarcely been tapped up to date. First experiences with modern turbines could be collected since1995, when the Danish company Vestas donated a 225 kW machine to the Munro College. Since 1995, the PCJ has been studying the feasibility of a wind farm project. Wind speedassessments have been conducted at various sites across the island, including: 1. The Palisadoes Strip near Norman Manley Airport 2. Green Castle on the north coast, near Robins Bay and west of Annotto Bay 3. Spur Tree on the Manchester Plateau 4. Blenhiem on the Manchester Plateau 5. Wigton on the Manchester Plateau. The site near Wigton in the parish of Manchester proved to be the location with thehighest medium wind speed. The first wind farm in Jamaica was actually located at this site andcommissioned in May 2004, adding to the very few plants already in operation in the Caribbean.20The project has been developed jointly by PCJ and the British developer Renewable EnergySystems Ltd (see Box 2 in the Annexes section for project details). The wind measurements taken at Blenhiem between June 1997 and October 1998 showedaverage speeds of 6.3 m/s at a height of 40 m. Most of the wind measurements were notcontinuous or were not conducted over a sufficiently long period of time. The preliminary results have proven however, that Jamaica has sufficient wind potentialfor energetic purposes, mainly along the southern coast. Beyond the existence of an adequatewind regime during most of the year, criteria for the use of wind energy at specific sites aremainly: • The accessibility by road or other transport means for the supply of the turbines20 12 MW are operating in Curaçao, 35 MW in Costa Rica, about 15 MW on Guadeloupe, and 19.5 MW on the Caribbean Coast of Colombia. 27
  26. 26. ECLAC – Project documents Renewable energies potential in Jamaica • Land ownership and sufficient land space for wind farms • Proximity to the high voltage transmission grid • The topography at the site and in the vicinity • The required distance from dwellings • Suitability of soil conditions for the foundations. PCJ estimates that at least another three wind farms at various other sites could bedeveloped with about 20 MW each. It cannot be verified at this stage, if this assumption isrealistic. Further long-term wind measurements would be required for those sites, which matchthe general preconditions, listed above. From the electrical point of view, a wind capacity of up toabout 15% of the total maximum load would not interfere with requirements for allowed voltageand frequency fluctuation. While currently the first pilot turbines of 5 MW capacity have been installed in Germany,the manageable size in Jamaica will be limited for the time being to a maximum of 1 to 1.5 MWdue to transport conditions and crane availability for mounting of the turbine. In some time in thefuture and after further experience with wind use on land, investigation could also be started oninstalling turbines off the coast of Jamaica in shallow waters. Prices for wind turbines and transport range at about US$ 1 million per MW of ratedcapacity, excluding costs for roads and other civil works, grid connection, planning andfinancing, which make up about one fifth of the total investment. Since the turbines have to becompletely imported, duty tax exemptions can be decisive for the commercial success of futurewind power projects. For operation and maintenance as well as spare parts an annual percentageof 3 to 5% of the investment costs needs to be taken into account. Since JPSCo has declared explicitly that it will not invest in wind energy, further windfarm projects will depend on third-party engagement by private developers and operators,possibly in joint-venture with the state-owned PCJ. As long as no model power purchaseagreements and clear rules exist for the remuneration of electricity supplied to the public grid,such contracts will have to be negotiated with JPSCo on a project-to-project basis. Wind energy applications are generally well suited projects for CDM financing. Due totheir higher generation costs compared with fossil fuel-based plants, the application of windturbines is in accordance with the additionality criteria required for CDM projects. The utility of Medellin21 in Colombia has successfully placed its wind farm at Jepirachion the Caribbean coast within the Prototype Carbon Fund (PCF) of the World Bank in 2004.22,23The average net generation costs in this case have been calculated at US$ 38.35/MWh and werehigher than comparable production with fossil plants. Baseline emissions are reflecting reality best if calculated based on the projected growthscenario for electricity demand and the anticipated dispatch system for the plants in the system21 Empresas Públicas de Medellín. All relevant documents for this project can be accessed on the website of the Prototype Carbon Fund (http://prototypecarbonfund.org/).22 A minimum CO2 reduction of 1.168 million tonnes over a 21 year period has been projected, displacing fossil fuel thermal power as the most expensive dispatchable electricity. The output of the wind farm is estimated to be 68.3 GWh per year. Note that in size and wind regime this project is very similar to the Wigton Wind Farm in Jamaica.23 Several other wind projects in the region have also submitted applications to the Prototype Carbon Fund, namely the projects Chorotega and Vara Blanca in Costa Rica and the Cruz Azul wind farm in Oaxaca, Mexico. 28
  27. 27. ECLAC – Project documents Renewable energies potential in Jamaicaand those that are envisioned to be added. A sound long-term capacity expansion plan (as hasbeen recently established by Jamaica) and accepted CO2 emission data (in the case of fossilplants) are a fundamental prerequisite for such calculations. It can generally be assumed that windpower, as non-dispatchable electricity, will displace always the most expensive units at themargin. Of course it is in the nature of this topic, that emission reductions over time periods of upto 21 years can only be projected by narrowing simulations and will never be fully in line withfuture actual outcomes. For wind energy (as well as a number of other renewable energy) projects like theWigton Wind Farm, the CDM Executive Board has approved and published in September 2004 anew “Consolidated baseline methodology for grid-connected electricity generation fromrenewable sources”. This methodology has been developed by combining the techniques ofdifferent individual CDM proposals, of which the Wigton Wind Farm was one. 29
  28. 28. ECLAC – Project documents Renewable energies potential in Jamaica IV. Hydropower Due to its topography and climate Jamaica has various rivers suitable for the exploitation ofhydropower. Electricity generation by using run-of-river plants has been a common operation on theisland for the last 100 years. Currently there are 8 plants in operation, all owned and maintained by JPSCo and providingbase load capacity for the public grid during the rainy seasons (see table 7). All hydropower plantscombined contributed with only 4% to the public electricity generation in 2003. Frequent droughtslimit the supply of firm capacity during some periods of the year. Most of the systems are fairly old,with the youngest ones being more than 15 years in place. TABLE 7 INSTALLED HYDROPOWER CAPACITY IN JAMAICA Year of Capacity Location commission (mw) Upper White River 1945 3.8 Lower White River 1952 4.9 Roaring River 1949 3.8 Rio Bueno A 1949 2.5 Maggotty Falls 1966 6.3 Constant Spring 1989 0.8 Rams Horn 1989 0.6 Rio Bueno 1989 1.1 Total 23.8 Source: own elaboration. In February 2003 JPS completed a comprehensive rehabilitation of its hydroelectric units,which contribute currently a total of 21.4 MW to the grid. The rehabilitation project, which startedprior to privatization, was implemented in partnership with the German Government (through itsdevelopment bank KfW) at a cost of US$ 27 million. 31
  29. 29. ECLAC – Project documents Renewable energies potential in Jamaica A number of studies mandated by PCJ have shown that the hydroelectrical potential couldbe further exploited by constructing a number of small-scale plants. The total technical potential isestimated to be in the range of more than 80 MW, including one large-scale facility at Back RioGrande (see table 8). TABLE 8 PROPOSED HYDROPOWER PROJECTS Annual Capacity Investment Location generation Status (mw) (gwh) (US$) Back Rio Grande 50.0 Hydroelectric development feasibility study 1986-1991; environmental barriers seen by the water resources authority Great River 8.0 Feasibility study 1985 Laughlands 1.3 8.44 2 million Re-analysis in 2001; re-assessment with flow Great River measurements in 2004/2005 (gtz/credp) Rio Cobre 1.0 4.1 3.5 million Feasibility study 1985; pricing updated in 4.45 (1995) 1989; updated feasibility study in 1995 (alternative) 2.9 million (alternative) Spanish River 2.5 4.7 million Project status report 1996; feasibility study for 2.2 MW review 1996; part of the equipment (30%) (review: 5.5 has been delivered by italy several years million) ago, but was not put in place due to economic reservations; chinese developer has shown interest in using the parts and set up a plant, possibly at a different location Negro River 1.0 Yallahs River 2.6 Wild Cane River 2.5 Morgan’s River 2.3 Green River 1.4 Rio Grande 3.6 Dry River 0.8 Martha Brae 4.8 River Total 81.7 Source: own elaboration. While the technical feasibility has been proven in most cases, the economic assessmentresulted in negative decisions in the past, with high specific investment costs involved and lowcomparative electricity costs from conventional plants. This picture may change nowadays on thebackground of boosting oil prices and subsequently increasing electricity generation costs. Some ofthe previously selected sites are therefore re-evaluated as in the case of the Laughlands Great RiverHydropower Project.24 Some of the potentials could be downscaled due to reduced flow data as aresult of changing precipitation25 and competing up-stream water uses for irrigation and fresh-watersupply.24 A feasibility study has been mandated at the end of 2004 in the framework of the GTZ Caribbean Renewable Energy Development Project. The study includes long-term measurements and will not be completed before the end of 2005.25 The Water Resources Authority reports that no change in average precipitation has occurred in recent years, as well as no change in the total water flow. But the occurrence of more peaks and bottoms is noticeable, due to soil degradation as consequence of deforestation and extended agricultural use. 32
  30. 30. ECLAC – Project documents Renewable energies potential in Jamaica Realization of the largest hydropower plant at the Back Rio Grande, which has beenassessed in great detail, is rather doubtful, due to restrictions from the environmental and touristicside. This project has received considerable attention in the past, since it has a high potential forfirm capacity (45.6 MW), while all other schemes combined are estimated to have a firm capacityof not more than 6 MW. One of the more recent hydropower studies (1995) concerns with the feasibility of a run-of-river plant at the Rio Cobre Plant. This plant with two submersible turbine-generator units wasestimated to cost about US$ 2.9 million, the total avoided cost was calculated at 7.5 US-cents/kWh. Beyond the listed projects a systematic new assessment of the existing potentials mayidentify further sites to be applicable for housing hydropower plants. According to the WaterResources Authority, daily stream flow data are available for all about 100 streams (an equalnumber of gages is installed), so that there is only limited need for additional measurements. Inparticular very small hydro plants for remote settlements or industrial and agricultural facilitiescould find new applications. Legislation requires a license for all types of water uses, issued by the Water ResourcesAuthority. The license is granted for a period of 5 years, but can be extended thereafter. Incompeting situations preference is given to fresh-water use over any energetic purposes. Allenvironmental aspects have to be solved with the National Environment Protection Agency(NEPA). All proposed projects would have to be realized with private capital, since JPSCo hassignalled no interest in operating further small-scale hydropower stations. 33
  31. 31. ECLAC – Project documents Renewable energies potential in Jamaica V. Biomass energy 1. Sugar industry in Jamaica The production of the jamaican sugar industry has been in a state of decline and uncertaintyfor the past three decades. The levels of production, productivity and contribution to the macro-economy have experienced significant setbacks. During the crop season 2002/2003 production of 96-degree sugar was down to a historic lowof 152,000 tonnes from seven factories (5 state owned, 2 private), compared to 176,000 tonnes in theprevious season and more than 250,000 tonnes in the calendar year 1980.26 In the harvest period2003/2004 the situation improved somewhat with a production of approximately 195,000 tonnes ofsugar from 2.1 million tonnes of cane, supported by a better quality of sugar cane supplied to themills.27 TABLE 9 PRODUCTION STATISTICS: SUGAR CANE AND DERIVATES, 1999-2003 Unit 1999 2000 2001 2002 2003 Cane Milled ‘000 tonnes Total 2 313.0 2 025.0 2 231.0 1 965.5 1 775.7 Farmers 1 127.0 920.0 949.0 852.0 748.5 Estates 1 186.0 1 105.0 1 282.0 1 114.0 1 027.3 Sugar Production ‘000 tonnes Calendar Year 207.0 203.0 199.0 170.0 124.6 Crop Year (Dec. previous year – April) 204.0 216.0 204.0 174.6 152.5 Acreage Reaped (Industry) ‘000 hectares 37.6 39.4 36.0 34.2 30.6 Tonnes Cane per Hectare ‘000 tonnes 60.8 51.8 52.2 57.4 58.5 Tonnes Cane per 96 Sugar 11.3 9.4 10.9 11.3 11.6 Tonnes Sugar per Hectare 5.4 5.5 5.7 5.1 5.0 Molasses Production ‘000 tonnes 86.1 76.3 85.9 79.8 68.5 Source: Based on data supplied by the Commodity Boards, the Ministry of Agriculture and the Sugar Industry Authority.26 Sugar production peaked in 1965 with an output of 506,000 tonnes of sugar. By 1977, sugar production had declined to 296,000 tonnes.27 Close to 1.5 million tonnes of cane were processed in the state-owned factories alone. 34
  32. 32. ECLAC – Project documents Renewable energies potential in Jamaica Of the 2002/03 crop about 129,000 tonnes of sugar were exported, while about 100,000tonnes were imported, mainly in the form of refined sugar for the national food industry (in firstplace carbonated beverages).28 It is still the second largest export commodity in terms of earnings,exceeded only by bauxite, and remains the largest employer of labour with 41,000 workers in thecrop season (accounting for 16 to 18% of agricultural employment). The by-product molasses iscompletely used within the jamaican rum industry.29 The sugar industry depends almost completely on protected and guaranteed marketsthrough Preferential Agreements with the European Union. The price received for its raw sugar ismore than twice that prevailing on the world market. Not surprisingly, the current cost ofproduction is far from being competitive on the world market and even among Jamaica’s directco-producers from other ACP countries. Current estimates show that there are approximately 46,000 hectares designated sugarlands.30 The average yield of about 60 tonnes of cane per hectare is well below other countries(compared to 70 tonnes in Kenya and Mexico and 84 tonnes in Columbia).31 The ratio of canemilled to raw sugar production is about 10.8, higher than in comparative countries. A fixed amount of 126,000 tonnes of sugar is being exported to the European Union atbeneficial prices under an agreement (Sugar Protocol) with ACP countries. Another 18,600tonnes can be exported to EU countries under the Special Preferential Sugar (SPS), an addendumto the Protocol. The rest of the production is consumed internally. Due to the low-cost production of sugar in the new EU member states it is assumed thatthe price paid by the EU32 will be reduced after 2006 by an initial 10 to 15% and the SPSagreement will cease by 2008.33 This will put additional pressure on the industry to reduceproduction costs and diversify its market. The objectives of the Government of Jamaica and its sugar industry, established in asectoral policy in 1999, to improve this sector significantly within a period of 5 years, have beenalmost completely missed. The policy document called for the production of 311,000 tonnes of96-degree sugar from 3,155,000 tonnes of sugar cane at a ratio of 10.14. Acreage harvested andaverage yield were established in the policy at 42,000 hectares and 75 tonnes per hectare. Allthose targets could not be achieved. Depending on different scenarios, projections of 2003 for the total future sugar demanduntil 2008 show a high of 273,000 tonnes34 and a low of 179,000 tonnes (about the existinglevel).28 An absurd situation, but the price achieved from sugar exports is higher than the price for sugar imports. Sugar refining was discontinued in Jamaica in 1997.29 In 2003 about 100,000 tonnes of molasses were produced within the sugar process and used for the rum industry, another 10,000 tonnes had to be imported. Molasses is produced from 4% of cane conversion at the current level of efficiency in Jamaica. This rate could be lowered with improved technical processes.30 About 36,000 hectares are under cultivation for the state-owned sugar mills alone. In 1975, well over 55,000 hectares of land was under sugar cane farming.31 Sugar cane yields can vary significantly from year to year depending on precipitation, if fields are not irrigated artificially.32 The price has remained the same since 1984 at 523.70 Euros per tonne, well above world market price.33 The EU Commission has proposed a 37% price cut, gradually applied over three years, starting in July 2005. This would transfer into a loss of about US$ 37 million in export earnings per year for Jamaica.34 Includes coverage of currently imported refined sugar. 35

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